What are the interest rate calculation terms for Chesters' revolving loan?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
------| | 2026 | 580,684 | | 2027 | 448,557 | | 2028 | 300,148 | | 2029 | 116,999 $ 1,991,751 | The Agreement includes a revolving loan for maximum borrowings up to $1,000,000 that matures December 31, 2026. Interest is calculated at the greater of 5% or Prime rate plus 1% (8.5% at December 31, 2024 and 2023) and secured by essentially all business assets. There were no amounts outstanding under the revolving loan as of December 31, 2024 and 2023. The revolving loan matures on December 31, 2026.
As part of the Agreement, the Company is required to comply with financial and nonfinancial covenants. Management believes it was in compliance with all covenants as of December 31, 2024. The Company was not in compliance with certain financial covenants for the yea
Source: Item 21 — **FINANCIAL STATEMENTS (FDD page 48)
What This Means (2025 FDD)
According to Chesters' 2025 Franchise Disclosure Document, the agreement includes a revolving loan with a maximum borrowing amount of up to $1,000,000. This loan matures on December 31, 2026.
The interest rate is calculated as the greater of 5% or the prime rate plus 1%. As of December 31, 2024, and 2023, the prime rate was 8.5%. The loan is secured by essentially all of Chesters' business assets.
It's worth noting that as of December 31, 2024, and 2023, there were no outstanding amounts under this revolving loan. Chesters is required to comply with both financial and nonfinancial covenants as part of the agreement. While Chesters' management believed they were in compliance with all covenants as of December 31, 2024, they were not in compliance with certain financial covenants for the year ended December 31, 2023. However, the bank granted a waiver for this noncompliance during 2024.